Dual Currency Premium Account
If you are looking for an opportunity to earn a potentially higher interest rate than a traditional time deposit, you might wish to consider a Citibank Premium Account - a dual currency investment.
With this multi-currency account, Citibank offers you free access to the latest market information through our team of experienced and multi-lingual Treasury Services Managers, so you can make decisions that best suit your investment needs.
In essence, a Premium Account involves a currency option, which gives the Bank the right to repay the principal sum plus interest at maturity in either the base or alternate currency. A part or all of the interest that you earn on the Citibank Premium Account dual currency investment represents the currency option premium that the bank pays you for this right.
- Wide selection of currencies
- Flexible choice of tenures from 1 week to 6 months
- Opportunity to diversify into a second currency of your choice at your pre-agreed exchange rate
- Enjoy the expertise of our team of experienced and multilingual Treasury Services Managers
What You Get on Citibank Online
- Earn bonus interest rates* for every Premium Account established online
- View Premium Account holdings
- View historical and spot/forward Premium Account transactions booked through Internet
- Set up/Change expiring Premium Account alerts
- View Premium Account rates
*Only IPB customers who establish Premium Accounts via Citibank Online Investments will be eligible for bonus interest rates. Applicable interest rates for each transaction will vary depending on the transaction amount, its tenure and strike price. This promotion may be withdrawn at any time without prior notice.
Invest in 4 simple steps
- Invest by choosing 2 currencies, one as the base currency (usually the currency you begin with) and the other as the alternate currency
- Select from flexible tenures ranging from 2 weeks to 6 months
- Select from an extensive range of currencies: USD, JPY, AUD, NZD, EUR, GBP, HKD, CAD, CHF and SGD
- On maturity, get paid in either your base or alternate currency, depending on which is the weaker currency when measured against your pre-determined exchange rate (strike price)
Who is it suitable for?
You may find a Citibank Premium Account suitable for you under the following circumstances:
- You wish to receive a higher interest rate as compared to a traditional time deposit and you are comfortable holding either the base or the alternate currency.
- You are waiting to buy another currency for investment, diversification, business or migration purposes, or are planning to send your children overseas. You can earn a higher interest rate as compared to a traditional time deposit while waiting to buy the alternate currency at your preferred strike price.
- You are holding the view that your base currency will weaken further. In view of that, the higher interest rate earned may buffer you against adverse foreign currency movements and you are likely to have a higher chance of receiving your principal and interest back in your base currency that is weakening.
How does it work?
To help you understand how the Citibank Premium Account works, please take a few minutes to read this simple illustration.
|Select base currency||USD 100,000|
|Select alternate currency||AUD|
|Select tenure||1 month|
|Select preferred AUD/USD
|0.8780 (Assuming the current market for
AUD/USD is 0.9030 and you do not mind
diversifying into AUD at a preferred price of 0.8780.)
|Interest rate||6.50% p.a.*|
|Interest Earned||USD 541|
|Scenario 1||Scenario 2|
|Rate on Call Date1||USD Weakens to 0.9150||USD Strengthens to 0.8680|
|Payout Currency^||Principal and interest will be paid in USD||Principal and interest will be paid in AUD|
|Principal + Interest received||USD 100,541||AUD 114,511 (USD 100,541/0.8780)|
*This is an indicative rate for a USD Premium Account of USD 100,000 with AUD as the alternate currency, strike price 250 points away from the prevailing spot rate as of May 10, 2010 for a one-month tenure.
1Call Date is 2 business days before maturity date, 10am Singapore Time.
^ In the event that the market rate on Call Date is equal to the strike price, the Bank reserves the right to pay your principal plus interest in either the base currency (USD 100,541) or the alternate currency(AUD 114,511).
On call date, it will be determined if you will receive your principal plus interest back in your base or alternate currency depending on which is the weaker currency when measured against your strike price.
Should you be paid in your alternate currency (AUD), you may consider:
- Establishing another Premium Account with AUD as your base currency. This will provide you with an opportunity to convert your AUD back to your original base currency; or
- Placing your AUD in a time deposit
However, in this instance, you must be aware that if you choose to convert your AUD back to USD immediately, you will experience a loss as the prevailing foreign exchange rate is not in favor.
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What you will need
- Minimum US$50,000 (or equivalent)
- Minimum US$5,000 (or equivalent) for Premium Accounts established on Citibank Online
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We've put all the most frequently asked questions about the investment funds that we offer at Citibank International Personal Bank here to help you make the best investment decisions.
As with any other investment, there are risks associated with your investment in the foreign currency market with your Citibank Premium Account.
- There is a risk of losing part of your principal, when your Premium Account is exercised into the alternate currency, and you choose to convert it back to the base currency immediately.
- Should the currency market move against you, you must be prepared to buy your alternate currency at the agreed Strike Price, which would be less favorable than the prevailing exchange rate at the maturity of your Premium Account.
A Premium Account is unlike a traditional bank account as it is an investment and returns may vary. Premium Accounts are subject to a number of risks. A Premium Account is an investment in one or more financial instruments which may include currencies, forwards, equities, bonds, indices, interest rates, precious metals, commodities and/or any other financial or money market instrument. It is subject to exchange rate fluctuations, which may provide both opportunities and risks. A Premium Account will be paid in the financial instrument that is the weaker of the base financial instrument and the alternate financial instrument. If the alternate financial instrument weakens against the base financial instrument, you will be paid in the alternate financial instrument. This means you may effectively incur a loss on the principal amount of the Premium Account, because the amount paid at maturity, when converted back into the base financial instrument at the prevailing exchange rate, will be lower than the amount of the base financial instrument that you initially invested. The higher rate of interest you earn in the Premium Account as compared to a traditional time deposit may not compensate you for this exchange loss. Exchange controls may apply from time to time to certain foreign currencies. Our Treasury Services Managers and Relationship Managers will provide you with information on any exchange controls that are relevant to the currencies in which you invest. If your Premium Account consists of precious metals or commodities, you should note that physical delivery of the same and the wire transfers to or from your precious metals or commodities accounts are not permitted. You should note that a Premium Account is an investment product that should be held to maturity. Early withdrawal of a part of a Premium Account prior to the maturity date is not permitted. Early withdrawal of the whole of a Premium Account is permitted but strongly discouraged, because you will have to pay early termination charges and these charges will be deducted from the amount repaid under the Premium Account. Some of the factors used in calculating such charges include the exchange rate for the financial instrument pair, the prevailing interest rate and the remaining term of the Premium Account. As a result, the amount repaid to you may be less than the principal amount. If you wish to terminate your Premium Account prior to maturity, please contact the Bank. The Bank may, at any time at its discretion, terminate the Premium Account. This may happen, for example, if restrictions on convertibility and transferability become applicable to any of the financial instruments in your financial instrument pair. In such cases, payment to you will be made in the alternate financial instrument in your financial instrument pair or another financial instrument chosen by the Bank. You may incur a loss on the principal amount in such cases. Please refer to the Bank's website for any updates of foreign exchange control restrictions. You should obtain the advice of a licensed or an exempt financial advisor before making a commitment to enter into a Premium Account transaction. In the event that you choose not to seek advice from a financial adviser, you should carefully consider whether a Premium Account is suitable for you in light of your investment objectives, your financial means and your risk profile. For more information on a Premium Account, you should also carefully read the Premium Account Agreement.
In opening a Premium Account for you, Citibank Singapore Limited acts as principal to a Premium Account transaction. You are subject to the full credit risk of Citibank Singapore Limited. Any payment to be made on the Premium Account depends on the ability of Citibank Singapore Limited to satisfy its obligations as they come due. The Premium Account is a general and unsecured obligation of Citibank Singapore Limited. Citibank full disclaimers, terms and conditions apply to individual products and banking services.
A Premium Account is not insured by the Federal Deposit Insurance Corporation. Investment products including Premium Accounts are not available to U.S. persons and may not be available in all jurisdictions.
Deposit Insurance Scheme - Singapore dollar deposits of non-bank depositors are insured by the Singapore Deposit Insurance Corporation, for up to S$50,000 in aggregate per depositor per Scheme member by law. Foreign currency deposits, dual currency investments, structured deposits and other investment products are not insured.